Insurance Phone Fraud & Scams, Explained: Real Tactics Used by Today’s Fraudsters

Insurance fraud dates back to at least 300 BCE. Athenian orator and politician Demosthenes recorded the case of a merchant who borrowed money and agreed to pay it back with interest when the cargo (corn) was delivered. If he didn’t pay it back, the lender could claim the boat and cargo as collateral. But the merchant had no intention of returning with the cargo. Instead, he was going to sell the corn, take all the profits, then sink the ship. It might have worked if he hadn’t drowned while fleeing from his crew who had discovered his plan.

As time went on, fraudsters got better at, well, not dying mid-fraud. And now, they have sophisticated methods that target not only their local lender but also unsuspecting agents all over the world. While most insurers have strengthened defenses around digital fraud, the voice channel remains the most significant blind spot—and it’s being exploited rapidly. By identifying common methods used by bad actors and implementing the right tools, agents are empowered to proactively prevent fraud, not just flag it after it’s occurred.

Insurance Phone Fraud & Scam Tactics

While many phone-based fraud & scams target individual policyholders, insurance companies themselves are also frequent fraud targets. High-dollar claims, familiar scripts, and agents under pressure to help customers quickly all create opportunities for deception. In fact, A Pindrop report found a 475% increase in synthetic voice fraud attacks against insurance companies alone. And fraudsters are getting creative, finding ways to exploit vulnerabilities in verification processes, claims systems, and payment workflows—often using voice-based manipulation to bypass identity checks and trigger payouts. These scams could play out in several ways:

1. Beneficiary Change: A fraudster could use AI-generated audio to impersonate a policyholder and request a change in the life insurance policy’s beneficiary. They might claim to be recently diagnosed with a terminal illness, relying on emotion and urgency to manipulate the agent into changing the beneficiary to a “partner” or “friend.” And with advanced deepfakes, they can bypass most traditional voice authentication tools.
2. Preemptive Payout Fraud: Feigning terminal illness isn’t the only way to play with emotions. Bad actors could also pose as a family member or executor of an estate, claiming the policyholder has died. They may even add a sense of urgency to it, claiming the  policyholder has “died abroad,” and they need an expedited payout. They may cite difficulties accessing paperwork or official records from the foreign government, hoping to exploit the insurer’s urgency to assist.
3. Staged Incident or Property Theft Fraud: Property and auto insurance are frequent targets for fabricated or exaggerated claims. Fraudsters can create fabricated claims for car accidents, home burglaries, or stolen property. Bad actors can stage a car accident and submit photos, fake repair bills, and coordinated witness statements. In other cases, a “burglary” is faked, and claims are submitted for stolen electronics that were never missing in the first place. Sometimes, fraudsters insure property that doesn’t even exist then go on to file a claim to recoup costs of the non-existent property. 

Beneficiary changes, refunds, payment redirects, staged incidents—these are just a few ways bad actors can manipulate agents. But each of these scenarios often have a common denominator: social engineering. 

Social Engineering Techniques Behind the Fraud & Scams

Social engineering involves manipulating emotions and trust to trick individuals into willingly providing information or authorizing payments. This is far easier on phone calls; unlike emails or web portals, phone calls require “real” contact, giving the fraudster extra emotional leverage. The main tactics are:

1. Establishing credibility: Fraudsters often provide real policy numbers, partial personal info, or references to recent claims. These small valid details disarm agents and lend legitimacy to the entire call.
2. Exploiting fear and urgency: Creating urgency is a classic manipulation tactic. Both Fraudsters and Scammers push false emergencies (missed payments causing lapses, regulators waiting to investigate, death-related claims about to expire) making agents feel pressured to act fast.
3. Emotional manipulation: Emotional manipulation—using sympathy, fear, or even guilt—is another common tactic. Fraudsters might pose as a distressed family member or a helpful official guiding a victim through a fake process. This emotional bait can wear down safeguards and jumpstart panic responses.
4. Advanced technology: AI voice cloning technology has created a whole new challenge when detecting fraud. Bad actors can now impersonate policyholders over the phone, fooling voice authentication technology.

How Can You Combat Insurance Phone Fraud & Scams?

It seems like the second voice authentication became commonplace, bad actors already had a workaround. And, unfortunately, most fraud detection tools are reactive—they don’t catch signs of fraud until after the fraud has occurred. But there are things insurance companies can do to combat voice-based fraud and scams.

1. Educate Employees and Policyholders: Regular training on common fraud and scams and redlines and red flags helps your team and customers quickly spot suspicious activity and respond appropriately.
2. Implement Multi-factor Verification Procedures: Always confirm callers’ identities through multiple, secure, independent channels. Implementing layered authentication makes impersonation significantly harder.
3. Encourage Vigilance and Skepticism: Encourage your team and policyholders to question unexpected contacts critically. Confirm details independently before sharing information or making payments.

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You should also consider adopting proactive voice fraud detection. Advanced tools like Modulate’s VoiceVault are built with the features you need to catch fraud in the moment. To do so, VoiceVault offers:

• Real-time voice analysis: Detects deepfake voices, caller stress cues, background manipulation, and low-level emotional anomalies while the call is ongoing.
• Instant alerts for risky behaviors: Rather than reviewing calls later or relying on agent judgment alone, VoiceVault flags suspicious activity within 10–15 seconds—letting agents pause, verify, or escalate before proceeding.
• Integration with existing protocols: It layers on top of MFA, identity checks, and policy workflows.
• Enhanced contextual understanding: VoiceVault doesn’t just detect the what. It detects the why. Real-time insights and annotations give agents full context, making it easier and faster to identify and manage potential fraud cases.

Protect Your Agents from Phone Fraud & Scams with VoiceVault

Insurance scams targeting agents are stealthy—but not unstoppable. Educating staff and customers, enhancing verification processes, leveraging real-time conversational fraud detection, and consistently maintaining vigilance will help you stay one step ahead. By understanding the detailed tactics fraudsters use and how they manipulate trust, you can effectively minimize risks and protect your agents (and by extension, your customers) from bad actors. Book a demo today to see how VoiceVault can give your agents the extra assurance they need to not just detect fraud retroactively, but prevent it. 

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